Hagens Berman is Investigating United Development Funding IV
(NASDAQ:UDF) and Accusers Following “Ponzi Scheme” Allegations

December 14, 2015 01:31 PM Eastern Daylight Time

SAN FRANCISCO--(EON: Enhanced Online News)--Hagens Berman Sobol Shapiro LLP, a national investor-rights law firm, is
investigating United Development Funding IV (NASDAQ:UDF), and those
leveling accusations against it, following allegations from a
short-seller that a large portion of UDF’s 2015 distributions to
shareholders were funded with borrowed money – similar to a Ponzi
scheme. UDF stock has plunged over 50% in the last two days as a result.

“With help of those willing to come forward we should be able
to get to the bottom of this quickly and help investors in recovering
their losses.”

If you suspect you have losses in your investments in UDF as result of
this news or have knowledge relevant to the investigation, contact
Hagens Berman Partner Reed Kathrein, who is leading the firm’s
investigation, by calling (510) 725-3000, emailing UDF@hbsslaw.com
or visiting https://www.hbsslaw.com/cases/UDF.

“The allegations leveled against UDF are serious, and regardless of the
truth, investors have been hurt,” said Hagens Berman partner Reed
Kathrein. “With help of those willing to come forward we should be able
to get to the bottom of this quickly and help investors in recovering
their losses.”

On Dec. 10 and 11, UDF shares were down over 50% from $17.20 to $8.55 ET
as a short-seller described the company as something akin to a Ponzi
scheme, according to website postings. The short-seller suggests that
UDF and other “REITs pay off old investors with proceeds from freshly
raised debt and equity capital.”

United Development Funding IV's SEC filings reveal only 71 percent of
its year-to-date distributions in 2015 came from cash from operations.
The remaining 29 percent of the distributions paid were financed by
credit facilities, indicating that a large portion of UDF’s 2015
distributions to shareholders were funded with borrowed money.

The short-seller claims that different UDF REITs – UDF I, UDF II, etc. –
make loans against properties previously financed by other UDF entities.
According to reports, a development known as Shahan Prairie was financed
first by UDF I, then received financing from UDF III, slowly increasing
the loan balance through the financial crisis. In 2015, UDF V issued a
larger loan to the same project, with the proceeds used to repay UDF III.

United Development Funding IV is a real estate investment trust. The
company primarily invests in real estate projects in Texas, noting in
its filings that it has 123 loans on Texas projects. In addition, it has
three loans in Florida and one in North Carolina.

Whistleblowers: Persons with non-public information regarding UDF
should consider their options to help in the investigation or take
advantage of the SEC Whistleblower program. Under the new SEC
whistleblower program, whistleblowers who provide original information
may receive rewards totaling up to 30 percent of any successful recovery
made by the SEC. For more information, call Reed Kathrein at (510)
725-3000 or email UDF@hbsslaw.com.